mortgage in principle?

KL62

hi

you may have read a post i wrote a month or so ago my partner ( who has excellent credit rating and had mortgage with nationwide for 10 years) and i ( not so good credit limit few late credit card payments no defaults or ccjs, everything upto date in last 12 months) were going for a mortgage. Anyway today my partner went back to nationwide to get a remortgage for a house we want to buy and to get the mortgage in both our names. I didnt go as I was at work and they did some kind of credit check on us both ( i think they credit checked us because they brought up my previous address and all my old credit accounts and noted they were all now settled at nil balances). They then turned round and gave us a mortgage in principal certificate of £110000 (ltv 51%) and said if we want they can lend us up to £180000. Now I may sound silly here but does this mean that they have credit checked us and everythings fine we have passed their test? Its just i was really worried we would be declined because of my past and now we have this approval it all seemed a bit too easy?? I had provided all my i.d and proof of income etc. They told us to go and make an offer on the property and come back to them to finalise the mortgage. We got an offer of 5.34% over 5 years fixed which we thought was pretty good? Does this mean that the mortgage will just go through once weve made an offer or could the mortgage still get refused at a later date when they see my credit history? im very confused i just had persuaded myself we were going to get declined and it all seemed to go smoothly?

Rick62

An agreement in principle means they have done a credit check, so normally will lend you that amount subject to documentation (eg wage slips) supporting what you have told them. Your crredit history should have been taken into full consideration at this point, but it is 'in principle' only, not a guarantee until it goes for full underwriting.

I'm confused though, have they offered you £110k or £180k?

KL62

hi

they offered us £180000 in prinicpal (thats what it says on the certificate)but my partner told them we only wanted £110000 so on the extra pages after that it states a mortgage offer of £110000 and all the monthly payments interest rates etc on that amount. He took both our wage slips with us to prove our income plus our passports etc, so do you think it should all be ok if we do go ahead with them?

thanks

owned_by_2_Siamese

You cant guarantee they will do it untill you get a formal offer !

Our chain collapsed this week as the first time buyer at the distant bottom of the chain couldn't get the morgage even though they had an agreement in principle (albeit I suspect there was a problem !)

homer_j_3

owned_by_2_Siamese wrote: »

You cant guarantee they will do it untill you get a formal offer !

Our chain collapsed this week as the first time buyer at the distant bottom of the chain couldn't get the morgage even though they had an agreement in principle (albeit I suspect there was a problem !)

You cant guarantee it even with an offer. It is only guaranteed when the money has been released by the lender. One of my colleagues had a case fall apart the day before completion because there were 2 people named the same in the house and there were some form af fraud involved because of this.

Unlikely that this will happen in OP case but its probably as sure as you can get at this moment.

owned_by_2_Siamese

Fair point ! - I assumed Op wasn't a fraudster!!!

KL62

hi

thanks for your advice. So what kind of things could get the mortgage refused when it goes to underwriting. And if it does get refused what do we do then? I heard nationwide were a "tough cookie" anyway when it comes to lending you money hence why i was suprised when my credit check went through fine. Although my partner had an excellent credit rating and has been with them already for 10 years and we have a 90k deposit. My credit file has just a few late payments going back 2 or 3 years ago. No defaults or ccjs.I just will be so disapointed if we proceed with the application and it gets declined.

MortgageMamma

I'm confused about this, I actually dont think Nationwide have run a credit check as they are very tight where adverse credit si concerned - I've knoe them decline for a £100 default 4 years ago which was paid more or less immediately. Personally, I would call Nationwide up tommorow and see what they have done. Sometimes lenders work off initial credit score and don't look into the back i.e. the full detail of your credit information until you apply full to save on costs. Your credit score is something seperate from your credit report.

MM

KL62

well im confused too because the guy there had al my details on screen of all my prevous address financial links and could see all my credit accounts in the last 6 years at previous addresses. He could see all my accounts were now at nil balances and even commented on the fact that id had an mbna account and a vodafone account in the past. how could he know all that if he wasnt running a credit check?

herbiesjp

As long as there are no changes in details between now and the full application, and as long as you can support the information on the application (i.e. payslips etc) there is no reason why they should turn you down. It does sound like a credit check has been done - just as surprised as MM - as they do tend to be stirct on the criteria.

Valuation/survey is another area where they may decline the mortgage - if the survey is particularly bad

HTH

KL62

well if the mortgage is unsucessful due to a valuation then i suppose we have to understand thats just one of those things out of my control so to speak. its just im feeling guilty about my past history i dont want my partner to suffer because of my own mistakes which i would like to say are firmly in the past! Ive gone from being a 19 year old who doesnt realise the effect late payments can have and spending on credit cards without given it a second thought. To a 26 year old with no debt and a healthy savings balance !( never thought id see the day and its all thanks to my partner who has shown me the light!). Our house is on the market now so i presume as soon as its sold ( which i dont think will be a major problem its a first time buyers 2up 2 down 10 years old with new fittings at £125k, in a sought after area, the others down the street have been selling within a month of going on the market so fingers crossed it wont be months on end before we get a reasonable offer), then if we decide on a house we will proceed with the mortgage application and see what happens from there. I shall keep you posted and let you know if nationwide stick to their word! Thanks guys for your comments though they are appreciated. And i suppose if it all does go wrong and nationwide refuse at the last moment theyl be another route we can take.Failing that we'l just have to stay put!